Is Honduras the solution for the United States?

Honduras borders the Caribbean Sea (or called the Caribbean Sea) and the North Pacific Ocean. The country has a total area of ​​more than 112.000 square kilometers. For comparison: the Netherlands is just over 42.000 square kilometers. In 2018, the Central American country had a population of 9,2 million, of which the largest part lives between the capital Tegucigalpa and San Pedro Sula.

Loyal trading partners
The United States and Honduras have been loyal partners for many years. The country ranks 30th in the top U.S. agricultural export markets, importing $2018 million worth of U.S. agricultural products in 713. The United States stands up with this place 1 when it comes to the largest suppliers to Honduras (with a 38% share).

For example, in 2018, US pork exports to Honduras rose to a record high of 30,6 million kilos, which is 10% more than in 2017. The export value that year amounted to $59 million (+8%). However, this turned out not to be the best, because in the first half of 2019, pork exports to Honduras increased again by 11% to 44,6 million tons. The export value subsequently increased by 12% to $106,8 million.

Honduras appears to be a loyal trading partner not only for pork, because the United States has also been exporting relatively large quantities of soybeans, corn, wheat and animal feed to the country for years. In 2017 the export value of US wheat exports to Honduras was $51 million, while the value of corn exports that year was as high as $85 million.

New chances
Now that Honduras is experiencing strong economic growth, the United States sees opportunities to further expand exports to the country. According to the Global Agricultural Information Network (GAIN), growth in the food processing industry, along with growth in the hotel, restaurant and retail sectors, has increased demand for U.S. products in recent months. The fast-growing supermarket chains in the country have also focused on modernization, and an American product on the shelves seems to be part of this.

The 2 countries recently signed the Central America Free Trade Agreement (CAFTA-DR), which allows trade to Honduras to take place virtually without tariffs. The tariff on pork is currently still 2% to 7%, but the aim is for all tariffs to be reduced towards 2020% by 0. Of course, this deal comes at the perfect time for the United States, with the trade war it is waging with China in mind.

US President Donald Trump started this 'war' by saying in June 2016 that he planned to impose tariffs on Chinese products, which were actually introduced in August 2017. Today, China has imposed tariffs on pork, soybeans, and many other agricultural products from the United States (and vice versa). As a result, exports from China to the United States are in decline first half year decreased by 2019% in 8,1, while imports from the United States already decreased by 29,9% in that period.

The solution?
So it is not entirely surprising that the United States is looking for new, reliable trading partners like Honduras. Yet the Central American country cannot mean much in the dispute between the two countries. Like many other countries in that region, Honduras scores relatively low when it comes to meat consumption per capita. Although the demand for meat has increased over the last 10 years, and the United States can now benefit from the gap between production and consumption, it is not expected that America will suddenly be able to export tons more.

Not only is the very low meat consumption a challenge for American exporters, but the purchasing power in the country is also a 'problem'. For the time being, residents of Honduras only rarely purchase high-quality food products, as 30% of the population lives below the poverty line. The gross domestic product per capita (the average annual income of 1 inhabitant) in the country is approximately €4.999, while in, for example, The Netherlands on average is above €47.000.

All in all, the United States has a strong position in Honduras. American products enjoy a good image and distinguish themselves based on quality. In addition, transport only takes 2 to 3 days. However, Honduras is not expected to be a full-fledged replacement for the products that cannot go to China. The differences between the two countries (for example in terms of population, needs and prosperity) are too great for this.